Peer Review, Winter 2001

Vol. 3, 
No. 2
Peer Review

The Demographic Window of Opportunity: Liberal Education in the New Century

"As the conceptual share of the value added in our economic processes continues to grow, the ability to think abstractly will be increasingly important across a broad range of professions ... [T]he ability to think abstractly is fostered through exposure to philosophy, literature, music, art, and languages ... Yet there is more to the liberal arts than increasing technical intellectual efficiency ... The challenge for our institutions of higher education is to successfully blend the exposure to all aspects of human intellectual activity, especially our artistic propensities and our technical skills." Alan Greenspan (1999)

During the first decade of the new century, the nation will experience demographic and economic trends that could launch a major revival of liberal arts education. The baby-boom echo, most notably, provides raw material for a tremendous surge in new students. Generation Y, representing 4.3 million youngsters born between 1982 and 1997, is now beginning to enter the traditional 18- to 24-year-old college age and, given current enrollment rates, is likely to produce an increase of 1.6 million college students, of which 80% will be minorities, by 2015.

Meanwhile, the liberal educator's broad societal mission and the employer's more narrow economic interest are converging. Happily, the new knowledge-based economy needs the kinds of graduates that liberal education provides -- workers who have general skills, who can think outside the box, participate in team efforts, and flourish in interdisciplinary settings.

Of course, there is more to liberal education than dollars and cents (Gutmann, 1999; Rorty, 1999), and we should hesitate to justify it on purely economic grounds. Liberal education also husbands the enduring knowledge that can anchor an American society undergoing changes at blurring speeds. Moreover, it leads to the development of a healthy skepticism necessary to our individualistic culture and our participatory politic.

However, those who cannot get and keep good jobs are unlikely to become autonomous individuals and good citizens. If liberal education fails to pay sufficient attention to its role in preparing students for work, then it cannot achieve its cultural and political missions. Educators must face up to the economic realities that shape their work:

  1. The Knowledge Economy Requires the Skills Learned through Liberal Education

    We already know from the evidence of the past few decades that people aren't going anywhere in the new knowledge economy unless they go to college first. In 1959, only 20% of all prime-age jobs required at least some college; by 1997, the proportion was 56%. The largest share of current jobs and the fastest job growth today is occurring in the high-paying, high-skilled services sector¾in areas such as management, finance, marketing, business services, and the education and health care professions¾not in the low-wage services sector or the high-technology sector. These are the generalists who are best served by a liberal arts education (Carnevale and Rose, 1998).

    One of the greatest strengths of a liberal arts education is that the environment encourages student-to-student and student-to-faculty interactions. This learning process mimics the changing work environment and the increasing value of general cognitive, problem-solving and interpersonal skills over specific and technical skills. The high-skilled managerial, professional, and service jobs that dominate the new economy entail non-repetitive functions and overlapping team-based assignments rather than the standardized tasks of yesteryear. Much the same is true of high-technology jobs where technology has taken over much of the rote physical and mental work, leaving technical workers with non-repetitive deployment functions.1

    The new knowledge economy has also spawned a more complex set of performance standards, requiring broad general skills. These new standards include quality, variety, customization, customer focus, speed of innovation, and the ability to add novelty and entertainment value to products and services. To meet these new standards, companies need conscientious workers who are able to take responsibility for the final product or service, regardless of their level in the company. Variety and customization require workers who are creative problem solvers. A focus on customers requires empathy as well as good communications and interpersonal skills, and continuous innovation requires an ability to learn.

  2. Despite its Advantages, the Liberal Arts Bachelor's Degree Does Not Lead to the Best Entry-Level Jobs

    The educational value of the liberal arts may be widely recognized, but the market value of a liberal arts education is less certain, especially for those who hold bachelor's degrees. While they can go far in their careers, they also have trouble getting started. Every CEO can wax poetic on the value of the liberal arts, but their personnel departments tend to hire people with more specific business or vocational preparation. General skills, the kinds fostered by liberal education, turn out to be rewarded only after individuals arrive in senior, decision-making positions, late in their careers. Either the nation's employers need to think more long-term or those who hold liberal arts bachelor's degrees need to put a practical point on their educational pencils before they go into the labor market.

    For the most part, earnings depend very little upon where people attain their liberal arts bachelor's degree or what courses they take. What matters most is what kind of job they land after they graduate. Let's look at the data: On average, males with liberal arts bachelor's degrees start out and end up earning less than men with business or technical B.A.s. However, averages are deceiving. Men with liberal arts bachelor's degrees who become managers eventually earn more than physical scientists, architects, and business majors who do not become managers. In similar fashion, men with bachelor's degrees in English, sociology, or history who become managers or computer technicians eventually earn more than business, engineering, accounting, and scientific B.A.s who do not enter management or computing.

    The story is less optimistic for women with liberal arts degrees, who earn $32,000 per annum, on average. Because of the continuing segregation of women in teaching and clerical occupations, women with liberal arts degrees rarely break into the managerial ranks. Women bachelor's degree holders who major in fields like engineering, pharmacy, and computers earn between $10,000 to $15,000 more than women with liberal arts degrees. Women who break into the managerial ranks do even better, but they rarely begin with liberal arts bachelor's degrees (Hecker, 1995).

  3. When Liberal Education Leads to Graduate or Professional School, Success Is Guaranteed

    The surest route to higher earnings for liberal arts bachelor's degree holders is to go on to graduate and professional education. And students who choose liberal arts majors have a much greater chance of enrolling in graduate and professional school, winning graduate fellowships, and eventually completing graduate and professional degrees (Astin, 1999). In 1959, the median earnings of people with graduate degrees were less than those of people holding bachelor's degrees. In 1998, however, people with graduate education earned $15,000 more than people with bachelor's degrees.

    For women, graduate education is fast becoming the new threshold for access to managerial and professional occupation. In 1973, 73% of all prime-age women with graduate degrees went into the intellectual and caring professions; 10% were employed in managerial and professional jobs. By 1998, though, women were shifting out of the intellectual and caring professions; only 56% of women with graduate degrees were employed in these occupations. At the same time, managerial and professional jobs had expanded to constitute 21% of women with graduate degrees.

  4. Under-investment in Liberal Education is a Case of Market Failure to Recognize Latent Value

    The incongruity between initial hiring patterns among B.A.s and the eventual value of liberal education at work is only one example of a general failure of markets to encourage investments in liberal education. This under-investment stems primarily from the fact that (in an individualistic culture, a participatory polity, and a market-based economy) the crucial benefits of liberal education are indirect and long-term (Hartz, 1955; Weiss, 1988; Wiebe, 1995; Lipset, 1997). Investments that support the culture and polity bring few short-term or obvious economic returns.

    We can describe the economic and cultural value of liberal education as latent value. It is a seed that needs to be planted as soon as possible after students have demonstrated basic competencies, because it leavens all learning and practical experiences thereafter. Latent value is the educator's version of "patient capital" or long-term investment. Its value grows with experience and is the catalyst that turns rote knowledge into true understanding.

    Liberal education is also a crucial anchor for the professions in a world increasingly driven by the narrow valuation of cost efficiency and direct earnings returns. The struggle between the managerial values of the HMOs and the nurturing values and service standards of the medical professions can be seen as a test case, presaging larger struggles to balance managerial with professional values, a contest in which education plays an important part (Abbott, 1988; Freidson, 1994; Krause, 1996).

Opportunities and Challenges Ahead

The demographic and economic forces already in place guarantee a surge in new students competing for seats at liberal arts colleges. And as graduate and professional education continues to top the charts in earnings returns, the role of those colleges as preparatory schools for managerial and professional jobs will only expand. In short, the liberal arts colleges will survive, prosper, and grow in the new economy.

However, the future of liberal education, as distinct from liberal arts colleges, is less clear. The demand for it will certainly exceed any conceivable expansion in liberal arts colleges.2 Outside of that context, though, it is not clear how to expand investments in education's latent value in the face of growing cost pressures, not to mention the bias that considers liberal education to be expensive, impractical, and even irrelevant for the mass of American students.

Moreover, if we are going to provide liberal education in response to the new wave of incoming students, we need to do it right this time. The rapid expansion of higher education in the post-World War II era all too often offered liberal education as a fragmented set of general education electives, delivered in theater style where student-to-teacher ratios often exceeded a hundred to one-with graduate students often substituting for expected "big name" professors. Because the large classroom doesn't well replicate the liberal arts environment, where education quality is maximized with high student-to-student and teacher-to-teacher contact, this approach provided economies of scale, but they were false economies (Astin, 1999).

Improving access and quality of liberal education outside the traditional liberal arts colleges will not be easy. In the larger four-year institutions, the cost pressures will encourage the continuation of false economies in the provision of liberal education. And community colleges are already experiencing the struggle to balance liberal education and transfer preparation with vocational degrees, certificates, certifications, and customized training (Carnevale and Desrochers, 2001). With the exception of the most robust business-sponsored executive-development programs and the individual pursuit of avocational interests, mention of liberal education is a nonstarter in debates about lifelong learning, workforce training, and adult education.

There is no getting around the fact that the future of liberal education is largely about money. Even at current postsecondary participation rates, the coming demographic surge is likely to cost an additional $19 billion a year by 2015. If governments don't continue to pay for eighty cents on the dollar in new costs, tuition will continue to rise faster than the discretionary incomes of families, and public pressures will encourage even more false economies in funding liberal education. Students from low-income families, where minorities are concentrated, will be bumped down the hierarchy of selectivity and out of liberal education programs in general, opting for more vocationally oriented programs in less selective and two- and four-year colleges. Further, the general shift from need-based to merit-based aid will exacerbate these effects. And technology won't save the day, since the primary effect of new technology in service industries like education is not to reduce costs but to add value in the form of quality, variety, customization, convenience, novelty, and speed (Carnevale and Fry, 2001; OTA, 1990; Ehrenberg, 2000; Zuboff, 1988).

New funds for liberal education in postsecondary institutions will be very hard to find, even more so given the competing resource demands to establish a universal preschool system, to meet standards in elementary and secondary education, and to provide for lifelong learning.


Fully funding the latent cultural and economic value of liberal education will continue to be a daunting challenge. The economic and cultural costs of our continuing under-investment will only increase as the student population surges, as the new knowledge economy expands, and as the complexity of cultural diversity intensifies. Access to liberal education has become the standard for full inclusion in the culture and economy of the 21st century. However, rising cost pressures threaten to make liberal education a privilege rather than a prerequisite, even though that can only impair our economic performance and put our egalitarian values at risk.


  1. With so much attention focused on high technology, a return to the liberal arts might seem anachronistic. But high-tech is not where the jobs are. The share of high-tech and scientific jobs has doubled since 1959 but still represents less than 10% of all jobs. While technology has been the key ingredient in the recipe for the new economy, high-tech jobs, high-tech skills and high-tech earnings have not grown commensurately. The principal beneficiaries of the new technology have been its low-tech users in managerial, professional, and business service jobs (Carnevale and Rose, 1998).
  2. In concept, an idealized mass educational preparation should be a play in four acts, with liberal education introduced in the second act. In the first act, roughly consistent with our current pre-K-12 system, students will be met by socially prescribed standardized content for all students. This basic preparation and socialization should be performance-based, not time-based.
    Students should be allowed to move out of the pre-K-16 barracks once they have met accepted standards. For most students, this would occur somewhere between their high school sophomore and senior years. Once students have met basic standards, they should move into a more customized and student-driven curriculum that includes liberal studies. Some students might be best able to get a liberal arts degree in 2+2 programs that combine the last two years of high school and the first two years of general education or liberal arts curricula in college (Katz, 1996).
    The third act in the education sequence, somewhere between the current second year of college and the completion of graduate or professional degrees, should provide skills that make students employable. The last act is lifelong learning, which should combine both liberal and applied learning to satisfy both vocational and avocational needs.


Abbott, Andrew (1988). The System of Professions: An Essay on the Division of Expert Labor. Chicago and London: University of Chicago Press.

Astin, Alexander (1999). "How the Liberal Arts Colleges Affects Students." Daedalus 128(Winter) 77-100.

Carnevale, Anthony P., and Richard A. Fry (2001). Economics, Demography, and the Future of Higher Education Policy. Washington, DC: National Governors Association.

Carnevale, Anthony P., and Donna M. Desrochers (2001). Help Wanted ... Credentials Required: Community Colleges in the Knowledge Economy. Princeton, NJ: Educational Testing Service.

Carnevale, Anthony P., and Stephen J. Rose (1998). Education for What? The New Office Economy. Princeton, NJ: Educational Testing Service.

Ehrenberg, Ronald (2000). Tuition Rising: Why College Costs so Much. Cambridge, MA: Harvard University Press.

Freidson, Eliot (1994). Professionalism Reborn: Theory, Prophecy, and Policy. Chicago and London: University of Chicago Press.

Gutmann, Amy (1987). Democratic Education. Princeton, N.J: Princeton University Press.

Greenspan, Alan (1999). Remarks made by Chairman Greenspan at the 81st Annual Meeting of the American Council on Education, Washington, DC (February 16).

Hartz, Louis (1955). The Liberal Tradition in America. Boston: Harcourt Brace.

Hecker, E. Daniel (1995). "Earnings of College Graduates, 1993." Monthly Labor Review 118(12): 3-18.

Katz, Stanley (1996). "Restructuring for the Twenty-First Century." In Nicholas H. Farnham and Adam Yarmolinsky (Eds). Rethinking Liberal Education, 1st edition. New York: Oxford University Press.

Krause, Elliott (1996). Death of the Guilds: Professions, States and the Advance of Capitalism, 1930 to the Present, 1st edition. New Haven, CT: Yale University Press.

Lipset, Seymour M. (1997). American Exceptionalism: A Double-Edged Sword. London: W. W. Norton & Company.

Rorty, Richard (1999). Philosophy and Social Hope. New York: Penguin.

Office of Technology Assessment. U.S. Congress (1990). Making Things Better: Competing in Manufacturing. OTA-TET-443. Washington, DC: U.S. Government Printing Office.

Vargish, Thomas (1991). "The Value of Humanities in Executive Development." Sloan Management Review (Spring): 83-91.

Weiss, Richard (1988). The American Myth of Success: From Horatio Alger to Norman Vincent Peale. Urbana and Chicago: University of Illinois Press.

Wiebe, Robert H. (1995). Self-Rule: A Cultural History of American Democracy. Urbana and Chicago: University of Chicago Press.

Zuboff, Shoshana (1988). In the Age of the Smart Machine: The Future of Work and Power. New York: Basic Books.

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